Buying Employees a Meal

by WP

When an employer takes an employee out for lunch while on a business trip, how is the 50% applied or an employee pays for their lunch while away for business?

Total Lunch $33.60

Debit Meals Expense: 15.00
Debit Owners Drawings (Shareholder Loan): 18.60
Debit GST Pd On Purchases: 1.80
Credit Bank: 33.60

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Hi WP,

It's my understanding that you would book both of your scenarios where the employer and employee go out to lunch while on a business trip as follows:

DR Meals Expense 100% excluding sales tax as it is a legitimate business expense
DR Sales Tax Expensed 50%
DR Sales Tax Payable 50% (ITCs to claim)
CR Bank 100%

When the tax return is prepared, the meals will be claimed at 50%.

If you don't claim only 50% of the ITC each time you book a meal, you can make a adjusting at year-end to remove 50% of the ITCs.

If they are just out and about on business in the area they live (not on a trip), the meal is probably a personal expense ... but it depends on the individual situation and circumstance.

P.S. I would like to remind you there is a difference between information and advice. The general information provided in this post or on my site should not be construed as advice. You should not act or rely on this information without engaging professional advice specific to your situation prior to using this site content for any reason whatsoever.

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